Convergence could save plcs billions
Removing the burden of producing accounts using both IFRS and US GAAP for European companies could save 'billions' says McCreevy
European companies could save ‘billions’ each year if regulators can agree to
changes that remove the burden of producing accounts using both IFRS and US
GAAP.
The estimate came from EU internal markets commissioner Charlie McCreevy as
he highlighted the value to European business of the roadmap for accounting
convergence agreed with the US Securities and Exchange Commission. The roadmap
should end the requirement for IFRS users registered in the US to file separate
accounts using US GAAP.
‘There are estimates that for each of the 250 or so European issuers in the
US, reconciliation imposes a yearly burden of between $5m and $10m,’ said
McCreevy. ‘Dropping the reconciliation requirements would mean great reductions
in costs for business. Certainly gains in the low billions of euros per year.’
In April, the EC reached an agreement with the SEC to remove the
reconciliation requirement by 2009, possibly earlier if progress is made towards
accounting convergence by standard setters and IFRS implementation in Europe is
successful.
The EC is studying whether US, Japanese and Canadian GAAPs are equivalent to
IFRS, and hopes to remove the requirement for non-EU businesses listed in Europe
to reconcile to IFRS.